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Level Term insurance

Level term is a basic type of life insurance that comes in a variety of flavours.

Standard Level Term Assurance or LTA

This type of cover is life insurance that runs for a specific period of time and if the life assured dies during that period then the life company will pay out what they call the sum assured.

This type of cover carries no cash value at any time and if the life assured does not die during the term then there is no further benefit there after.


Convertible Term Assurance or CTA

This is level term assurance but with a benefit bolted on. The benefit is the option, at any time during the plans term, to convert to a whole of life assurance plan free of any underwriting.

This means that someone can purchase a cheaper convertible term plan now and upgrade to a more expensive whole of life contract in the future maybe when finances allow.

The benefit here is in so much that it is free of medical underwriting. This means it does not matter what happens to the life assureds health during the term of the convertible term contract as long as they exercise their right to convert before the end of the plan the life company will allow a whole of life contract to be issued.

Due to this potential risk of exposure to impaired lives in the future, convertible is a little more expensive than ordinary term. In addition it is only available to people who have little or not adverse health information.

It should be noted that the premium charged for the whole of life contract is the premium applicable to the client based on their age at the time of conversion.


Renewable term assurance or RTA

A very similar concept to that of the convertible term in so much that they allow something free of medical underwriting.

The difference is that the life company is allowing the plan to be renewed for a further term equivalent to that arranged originally. Again this is free of underwriting.

this allows a cheaper shorter term plan be arranged at outset and then a further term negotiated in the future.

Again the premium charged for the renewal is the premium for the new contact based on the clients age at renewal.


Decreasing Term assurance or DTA

This is term assurance that decreases at a set rate during the life of the plan.

This type of contract is generally written to cover mortgages and loans as it can be arranged to match the same decreasing rate of the level of the debt.


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